Summary: Teams of
students solve supply and demand problems using overhead
transparencies and present their solutions to their classmates.

Average grade from reviewers: A (1
review)

Instructions: Give
each student a copy of the following handout. Break students
into teams of two and give each team a blank overhead transparency
and transparency pen. Assign each team a supply and demand
problem from the handout and give students about ten minutes to
solve the problems and draw their solutions on the
transparencies. Have each team come up to the front of the
class and explain its solution. Note that there are two
trick questions. Since a change in a good's own price can
never shift the supply and demand curves, a change in the price of
hamburgers won't affect either the supply or demand curves for
hamburger and a change in the price of jellybeans won't affect the
curves for jellybeans. In these problems, students shouldn't
shift either curve. Explain that it's a question of cause
and effect: shifts in the curves cause the price to change,
not vice versa.

Handout:

For
each of the following problems, state which curve would shift:the supply curve or the demand curve.Then state whether the curve would shift to the right (an
increase in supply or demand), or shift to the left (a decrease in
supply or demand). (Hint:Beware
of two trick questions!)

Market

Event

Would
the demand curve or supply curve shift?

Would
the curve shift to the right or left?

wheat

A drought destroys much of the crop.

Supply

Left

redwood lumber

Environmentalists urge consumers to
boycott redwood products.

cigars

A new study shows that smoking cigars
results in lots of wrinkles.

butter

The price of margarine goes up.

paper

The price of wood pulp rises.

Hula hoops

Brad Pitt confides to People magazine
that "he gets a big kick out of his hula hoop."

yachts

The average price of stocks falls by
over 20% between now and the end of the year.

gasoline

Large sports-utility vehicles (like
Suburbans and Expeditions) become more popular.

umbrellas

Heavy rain is forecast.

tofu

E. Coli bacteria is found in another
meat plant.

gasoline

Two oil supertankers collide.

hamburger

The price of hamburger rises.

oranges

There's an early frost which destroys
much of the crop.

apples

A new pesticide is developed which
controls tent caterpillars.

grapes

The National Marines Fisheries Service
bans pesticide spraying within 1,000 feet of waterways
containing coho salmon.

wine

The average wage of grape harvesters
rises by 10%.

U.S.
cars

The
U.S.
imposes a tariff on Japanese car imports.

hospital beds

Scientists discover a pill that cures
cancer.

cement

A 7.9 earthquake hits San Francisco.

Video rentals

The price of getting cable TV goes up.

windshields

A new law is passed requiring gravel
trucks to cover their loads with tarps.

Taxi service

Local subway workers go on strike

Bike helmets

The price of bicycles goes down

melons

The cost of water goes up.

Lucerne
milk

The price of Safeway milk goes down.

jellybeans

The price of jellybeans goes up.

Oreo cookies

The price of milk increases.

Burger King whoppers

McDonald's lowers the price of Big
Macs.

Hot dogs

60 Minutes does an expose called
"The Truth about Hot Dogs."

Hot dog buns

The price of flour rises

butter

Mad Cow Disease wipes out a lot of
dairy cows.

candles

An electric company official announces that a
computer bug will likely result in power outages.